Super funds had a solid March quarter, with the median growth fund (61 to 80 per cent growth assets) up 2.5 per cent and industry funds outperforming retail funds by 0.1 per cent.
Returns over the previous two quarters were also positive, at 3.1 per cent for the September quarter and 2.5 per cent for the December quarter, making the cumulative return for the first nine months of the 2016-17 financial year now 8.5 per cent, according to new figures produced by research house Chant West.
Research house SuperRatings found that balanced funds rose at an average of 1.5 per cent for March and reported a 2.5 per cent rise over the March quarter, the same return reported by Chant West.
“Global markets have generated strong returns on the back of improving economic fundamentals and consistent signs of inflation, which have generally fed back into Australian shares. Overall, the balance of risk appears to be improving, but while investors have every reason to be upbeat, they should not expect clear skies for the rest of the year,” SuperRatings said in a media release.
Chant West reported March quarter returns mainly resulted from strong share markets. Australian shares advanced 4.7 per cent while international shares were up 5.4 per cent in hedged terms but, with the appreciation of the Australian dollar (up from US72c to US76c over the month), the return in unhedged terms was lower at 0.9 per cent.
Listed property was down, however, with Australian and global REITs retreating 0.1 per cent and 1.5 per cent, respectively, the group found.
As the above chart shows, industry funds equaled the performance over retail funds in March and returned 2.5 per cent for the quarter while retail funds returned 2.4 per cent.
“Growth funds have performed better than expected this financial year. With only the June quarter remaining, there’s a very good chance that they’ll deliver an eighth consecutive positive financial year return. This is particularly impressive given the uncertain economic and political climate we’ve seen over the past few years,” Chant West director, Warren Chant, said.
“While global economic growth remains patchy, the picture is certainly better than it was 12 months ago. US economic data continues to show improvement, and the share market has responded with solid gains.”
“In Europe, macroeconomic data released during the quarter was mainly positive but there remains some nervousness around political developments,” Mr Chant said.
“Closer to home, China’s economic growth continued to show signs of stabilising. However, US President Trump’s protectionist policies, if enacted, have the potential to set off a trade war that could be damaging.
Back in Australia, the RBA kept interest rates on hold at 1.5 per cent. However, while GDP growth remains stubbornly constrained a further stimulatory rate cut this year remains a possibility.”